Thailand has long been a strategic hub for international business expansion, thanks to its strong infrastructure, central location in Southeast Asia, and pro-business government policies. For foreign companies aiming to establish a non-revenue-generating presence in the country, a Representative Office is one of the most straightforward and low-risk entry models.
A Representative Office in Thailand serves as an extension of a foreign company, limited to specific non-commercial activities. It does not earn income, make sales, or sign contracts on behalf of the parent company. Instead, it facilitates communication, supports operations, and conducts research and analysis within Thailand. While there is only one official legal structure for a representative office under Thai law, it can serve multiple types of business functions, which are often referred to informally as “types” of representative offices based on their activity.
This guide explores the legal foundation of a representative office, outlines the permitted activities, and explains the functional types based on the scope of operations.
1. Legal Framework of Representative Offices in Thailand
A Representative Office in Thailand is governed under the Foreign Business Act B.E. 2542 (1999). As it performs service activities and is 100% foreign-owned, it falls under restricted categories of business. Therefore, a foreign company must obtain permission from the Department of Business Development (DBD), Ministry of Commerce, to legally operate a representative office in Thailand.
Key legal characteristics include:
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Must be established by a foreign parent company
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Cannot generate income in Thailand
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Cannot enter into sales or purchase agreements
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Must report expenses and operations to the DBD annually
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Requires a minimum capital of 2 million THB (can be remitted in phases)
2. Permitted Activities of a Representative Office
A representative office in Thailand is only allowed to conduct five types of activities on behalf of its head office. These are defined clearly by Thai authorities to ensure the office remains non-revenue-generating.
Type 1: Sourcing of Goods or Services
This involves finding and procuring raw materials, components, or services in Thailand for the parent company’s use abroad. The representative office acts as a procurement liaison without entering into direct purchase agreements.
Example: A Japanese electronics company sets up a representative office to identify and report on Thai suppliers of circuit boards.
Type 2: Checking and Controlling Product Quality
The representative office may inspect or monitor the quality and standards of goods that are manufactured or purchased in Thailand for export. This ensures the parent company’s quality requirements are met.
Example: A European fashion brand opens a representative office to perform quality checks on apparel produced by Thai garment factories.
Type 3: Providing Information to the Parent Company
The office may collect and report business-related data back to the head office. This can include market trends, regulatory developments, or competitor activities within Thailand.
Example: A U.S. pharmaceuticals company establishes a representative office to research Thailand’s healthcare regulations and drug approval process.
Type 4: Reporting on Business Movements in Thailand
This involves keeping the parent company informed about market conditions, economic indicators, and potential business opportunities or threats.
Example: A German logistics firm uses a representative office to monitor the development of transportation infrastructure in Thailand.
Type 5: Promoting Products and Services of the Head Office
The office may engage in promotional activities such as attending trade fairs, distributing brochures, and maintaining marketing communications — provided it does not make sales or receive orders.
Example: A South Korean cosmetics company sets up a representative office to conduct marketing campaigns and public relations for its brand in Thailand.
3. Types of Representative Offices Based on Functional Focus
Although all representative offices in Thailand are legally the same, they are often categorized informally based on the type of permitted activity they prioritize. These “types” help businesses choose the appropriate function for their Thai operation:
a. Sourcing-Focused Representative Office
This type centers on supply chain and procurement activities. Common in the manufacturing, automotive, and textile industries, the office scouts local vendors and helps manage orders and quality assurance.
Ideal for: Manufacturing companies seeking to source materials in Thailand
b. Marketing and Promotion Representative Office
While it cannot close deals, this type of office focuses on product visibility and brand awareness through advertising, trade shows, and media relations.
Ideal for: Consumer goods and technology companies looking to build brand presence
c. Research and Market Intelligence Office
This office is geared toward data collection and market analysis, useful for companies considering future investment or market entry.
Ideal for: Strategic planning teams and companies exploring expansion into ASEAN markets
d. Quality Assurance and Inspection Office
Focused primarily on controlling product quality, this office conducts audits and inspections before goods are exported.
Ideal for: Companies that outsource production to Thai factories
4. Key Requirements for Establishing a Representative Office
To establish a representative office in Thailand, the foreign company must meet several criteria:
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Minimum capital of THB 2 million (can be injected over 3 years)
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At least one responsible person in Thailand (can be a foreigner with a work permit)
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Office lease agreement (virtual offices not allowed)
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Registration with the Revenue Department, Social Security Office, and Department of Business Development
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Annual reporting to authorities on operational activities
5. Benefits of a Representative Office
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No corporate income tax (unless involved in profit-making activities, which is prohibited)
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Low-risk entry strategy for market exploration
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Enables local presence without full company registration
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Easier regulatory compliance compared to full branches
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Offers groundwork for future business expansion in Thailand
6. Limitations and Considerations
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Cannot generate revenue or issue invoices in Thailand
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Limited scope of operations strictly defined by law
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Must hire at least one Thai staff for every foreign employee (for work permit compliance)
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Cannot import goods for sale; only for internal testing or promotional use
Conclusion
A Representative Office in Thailand is an ideal solution for foreign companies seeking a soft entry into the Thai market without the commitment and obligations of a full business operation. Whether used for sourcing, research, promotion, or quality control, this entity allows companies to gain valuable insights and establish relationships, all while remaining compliant with local laws.
While legally there is only one structure for a representative office, businesses often categorize them based on their functional objectives. Understanding these operational “types” can help foreign investors select the best strategy for their goals in Thailand.
